Shopify headquarters in Ottawa, Canada.
David Kawai/Bloomberg
Shopify shares are gaining ground Wednesday after the e-commerce software company posted blowout results for the first quarter, while continuing to warn that growth is likely to slow as the economy reopens and the pandemic recedes.
Shopify stock (ticker: SHOP) was up 10.1%, at $1,274.13, in recent trading. The S&P 500 is up 0.2%.
For the quarter, Shopify reported revenue of $988.6 million, up 110% from a year earlier and more than $100 million above the Street consensus estimate of $865.5 million. Gross merchandise value (GMV) was $37.3 billion, up 114%. On an adjusted basis, the company had profits of $2.01 a share, nearly triple the Street consensus forecast of 73 cents a share. Overall net income was $1.3 billion, or $9.94 a share, including a $1.3 billion unrealized gain on the company’s investment in Affirm Holdings (AFRM), a consumer finance start-up which went public in January.
Shopify said “subscription solutions” revenue was $320.7 million, up 71%, driven by more merchants joining the platform. “Merchant solutions” revenue was $668 million, up 137%, and driven by the growth in GMV.
Shopify said it had $7.9 billion in cash, equivalents, and marketable securities at quarter end, up from $6.4 billion one quarter earlier, largely due to a $1.5 billion stock offering in the quarter.
The company didn’t provide granular guidance for the June quarter or the full year, but it did include some more general comments on the outlook, while continuing to caution that growth would likely moderate from here.
“Our full-year 2021 outlook is guided by assumptions that remain unchanged from February: that as countries continue to roll out vaccines in 2021 and populations are able to move about more freely, the overall economic environment will likely improve; some consumer spending will likely rotate back to offline retail and services; and the ongoing shift to ecommerce, which accelerated in 2020, will likely resume a more normalized pace of growth,” the company said in its earnings news release.
Shopify noted that the U.S. government in March passed a coronavirus relief package, and began processing stimulus payments in early March. “The benefit to Shopify’s GMV from this latest round of stimulus ended in early April,” the company said. “In view of these factors, we continue to expect to grow revenue rapidly in 2021, but at a lower rate than in 2020.”
Shopify said it expects the number of new merchants to join the platform this year to be lower than in 2020, but higher than any other previous year. “We do not expect the surge in GMV that drove merchant solutions in 2020 to repeat,” it added.
The company also said it expects to spend aggressively in 2021. “We continue to expect rapid growth in gross profit dollars in 2021 and plan to reinvest back into our business as aggressively as we can, with the year-over-year growth in operating expenses accelerating each quarter throughout the rest of the year,” it said. “As such, we expect full year 2021 adjusted operating income to be below the level we achieved in 2020.”
Write to Eric J. Savitz at [email protected]
